Lew, Solomon v Kaikhushru Shiavax Nargolwala and Others and another appeal

• Jurisdiction: Singapore
• Judge: Andrew Phang Boon Leong JCA,Jonathan Mance IJ,Sundaresh Menon CJ
• Judgment Date: 10 February 2021
• Neutral Citation: [2021] SGCA(I) 1
• Docket Number: Civil Appeals Nos 38 and 126 of 2020
• Subject Matter: Trusts,Accessory liability,Costs,Choice of law,Contract,Civil Procedure,Agency,Formation,Conflict of Laws,Construction of agent's authority
• Published date: 16 February 2021
• Hearing Date: 25 November 2020
• Defendant Counsel: Ramesh Kumar s/o Ramasamy, Tan Shu-Ning Alyssa, Lim Min Li Amanda and Edmond Lim Tian Zhong (Allen & Gledhill LLP),Christopher Anand s/o Daniel, Harjean Kaur and Keith Valentine Lee Jia Jin (Advocatus Law LLP),Chua Han Yuan Kenneth and Hannah Alysha binte Mohamed Ashiq (TSMP Law Corporation)
• Court: Court of Appeal (Singapore)
• Plaintiff Counsel: Philip Antony Jeyaretnam SC, Lee Chia Ming and Lee Jiemin Nicolette (Dentons Rodyk & Davidson LLP)

Jonathan Mance IJ (delivering the judgment of the court): Introduction

Colloquially, these two appeals are about the sale of a villa. Legally, they are about the sale of shares in a company owning certain rights in relation to the villa. The key title rights consist of the lease of a plot of land, ownership of the building on it, a construction permit and house registration, together giving occupation rights. The villa, Villa 29 (“Villa 29”), built in 2007, is in the Andara Resort (“the Resort”), Phuket, Thailand. The Resort was developed by Mr Allan Zeman (“Mr Zeman”); its general manager was at all relevant times Mr Daniel Meury (“Mr Meury”); and it also had a sales manager, Mr Lyndon Phillips, until at least 26 October 2017, but he played no role in events. The company owning Villa 29 is the fifth respondent in Civil Appeal No 38 of 2020 (“CA 38”), Querencia Limited (“Querencia”), incorporated in the British Virgin Islands (“BVI”). Querencia was the vehicle which the first and second respondents in CA 38, Mr Kaikhushru Shiavax Nargolwala and Mrs Aparna Nargolwala (“Mr Nargolwala” and “Mrs Nargolwala” respectively; “the Nargolwalas” collectively), residents of Singapore, used to acquire Villa 29 while it was being built in 2007. The Resort and the Nargolwalas used the Resort’s lawyer, Mr Anurag Ramanat, jointly on the acquisition. The appellant in CA 38, Mr Solomon Lew (“Mr Lew”), resident in Melbourne, Australia, says that the Nargolwalas, in response to an offer he had made, communicated to him through Mr Meury their binding oral agreement to sell their shares in Querencia to him on or about 11 October 2017. The Nargolwalas deny this and say that they sold, and on 14 November 2017 transferred, their shares in Querencia to the third respondent in CA 38, Quo Vadis Investments Limited (“Quo Vadis”), a Hong Kong company controlled by the fourth respondent in CA 38, Mr Christian Larpin (“Mr Larpin”), and of which Mrs Dao Te Lagger (“Mrs Te Lagger”) was a director.

In these circumstances, Mr Lew claims that the Nargolwalas acted in breach of their agreement for sale to him, and acted in breach of fiduciary duty in transferring the shares in Querencia to Quo Vadis. He further claims that Mr Larpin and hence Quo Vadis knew of the Nargolwalas’ agreement to sell to him, and are liable for inducing its breach, and that Querencia itself was in breach of fiduciary duty and trust by dishonestly assisting the Nargolwalas’ breach, in particular, by registering the transfer of its shares to Quo Vadis.

The judge, Simon Thorley IJ (“the judge”), after a nine-day trial, held that Mr Lew’s claims failed in their entirety. They failed against Mr and Mrs Nargolwala because no binding agreement had been reached between them and Mr Lew, and they necessarily failed in consequence against all the other respondents. However, the judge also held that, had a binding agreement come into existence between the Nargolwalas and Mr Lew, then: (a) Mr Larpin would not have had sufficient knowledge of any sale to render him liable for inducing its breach, but (b) Querencia would had had sufficient knowledge through the Nargolwalas. The first appeal, CA 38, is by Mr Lew against the dismissal of all his claims against all the respondents.

In reaching his conclusions, the judge treated Singapore law as governing the issue of whether a binding agreement had been reached between the Nargolwalas and Mr Lew. That is the law for which Mr Lew had argued. The Nargolwalas argued on the other hand for Thai law. They did so because they further submitted that, under Thai law, the oral agreement alleged by Mr Lew would be unenforceable. Since Thai law would on this hypothesis be both the law of the State where the persons making the alleged oral agreement (Mr Lew and Mr Meury) were when it was made and the law governing the issue of whether they made any binding and enforceable oral agreement, the Singapore court should refuse to enforce it: see Dicey, Morris and Collins on The Conflict of Laws (Lord Collins of Mapesbury gen ed) (Sweet & Maxwell, 15th Ed, 2012) (“Dicey, Morris and Collins”) at para 32R-127. The judge heard evidence about Thai law and concluded that “there would be no different outcome on the primary question of whether a binding oral contract was reached on 11 October 2017 if Thai law applied”. However, he went on to hold that, under Thai law, any such oral contract, being a contract of a value exceeding 20,000 Bahts, would, as the Nargolwalas submitted, have been unenforceable in the absence of either (a) written evidence of it signed by either Mr or Mrs Nargolwala, (b) an earnest given, or (c) part performance. In these circumstances, when it came to costs, the judge ordered that, although the Nargolwalas should recover their reasonable costs of the proceedings generally, they should be deprived of their costs on the issue of whether Thai law applied, and they should bear Mr Lew’s costs on that issue. The second appeal, Civil Appeal No 126 of 2020 (“CA 126”), is by Mr and Mrs Nargolwala against that latter aspect of the judge’s costs order.

The factual history and the judge’s findings

Where there is a dispute as to whether a binding contract has come into existence, “the utmost attention has to be paid to the facts”: China Coal Solution (Singapore) Pte Ltd v Avra Commodities Pte Ltd [2020] 2 SLR 984 at [2]. Where there is (as here) a significant volume of contemporary documentation bearing on that question, then, as the judge highlighted at [210] of his judgment, reported in Lew, Solomon v Kaikhushru Shiavax Nargolwala and others [2020] 3 SLR 61 (“Judgment”), it is understandable that the “first port of call for any court in determining the existence of an alleged contract and/or its terms would be the relevant documentary evidence”, and that “credible oral testimony” will be most helpful where “given for the purpose of clarifying the existing documentary evidence” [emphasis in original]: OCBC Capital Investment Asia Ltd v Wong Hua Choon [2012] 4 SLR 1206 (“OCBC Capital”) at [41]. As such, it is important to scrutinise the relevant documentary evidence in detail in this case.

An important feature of the case is that the Nargolwalas and Mr Lew did not at any relevant time, until a very late stage on 14 November 2017 (see [28] below), meet or communicate directly. Their main means of communication was the Resort’s Swiss general manager, Mr Meury. Mr Meury was at the material times well acquainted with both the Nargolwalas and Mr Lew, and his “mercurial” role has given rise to much of the argument on the appeal. As the judge put it at [17] of his Judgment:

… As a hotel manager it is his job to keep guests happy and it is apparent from the facts of this case that one of the ways this is done is by ensuring, whenever possible, that the guests are told what they want to hear and, likewise, that they are not told what they do not want to hear. …

In or about 2015, the Nargolwalas purchased another villa on the Andara Signature estate and put Villa 29 at the Andara Resort up for rental and sale. A corresponding indication (with a reference to a price of US$8 million) appeared on the Resort’s website. Mr Lew and his future wife stayed in Villa 29 in April 2017 and it acquired a special place in their affections, as he proposed to her there during this period. They learned then, if they did not already know, that Villa 29 was for sale. They returned to it in September 2017, when, during discussions and dinner with Mr Meury on 6 September 2017, Mr Lew learned that Villa 29 was owned by a BVI company. Mr Lew wrote to Mr Meury the next day:¹

Good morning Daniel,

Thanks for joining us last night ! It’s always fun !

Re villa 29

My offer of usa $5 million is for an immediate cash settlement. The offer is a walk in walk out basis.

All chattels including crockery cutlery glassware cookware gym equipment TV screens stereo equipment furniture linen towels washing & dryer machines massage table ETC.

Offer is open for 7 days only.

Please advise soonest

Mr Meury replied that he would “try and do my best and get back to you as soon as possible.”²

The judge then found at [25] of his Judgment that:

A number of text messages passed between Mr Meury and Mr Lew over the next few days in which Mr Meury gave the impression that the Nargolwalas were considering the offer and Mr Lew then texted Mr Meury to say that he had: … full proxy & authority to close the deal at [US$5m]. [I] can promise you [I] will not pay one cent more. [I]t’s a walk in walk out take it or leave it deal! [T]he offer is open for exactly 7 days … don’t forget I will be sending some chocolates to the family in Switzerland! (you know what I mean) …

Thereafter, Mr Meury gave Mr Lew the impression that the Nargolwalas were expecting a slightly higher offer and that he was hoping that Mr Lew would come back with a higher offer, though Mr Lew did not; Mr Lew on the other hand sought to put pressure on the Nargolwalas by telling Mr Meury that, since he was no longer under any “obligation” to the Nargolwalas, he was sending his property manager to Phuket, Thailand to review other opportunities and meet with a local agent. Neither was, the judge found, the fact. Mr Meury had actually agreed with Mr Zeman not to communicate Mr Lew’s offer of US$5 million to the Nargolwalas, because they knew it would not be acceptable to the Nargolwalas. Mr Meury merely informed the Nargolwalas that there was “interest” in Villa 29. As for Mr Lew’s statement, it was untrue “deal talk” (see Judgment at [26]–[27]).

On 28 September 2017, Mr Lew texted Mr Meury to book Villa 29 for a further four nights from 8 October 2017, on the purported basis that his manager had sourced a few opportunities. On 6 October 2017, Mr Meury informed Mr Nargolwala by email that “the Australian potential buyer has booked Villa 29”, suggesting a chat and adding “I do feel if we...